The African Development Bank (AfDB) has cautioned government against the haphazard amalgamation of diamond producers, saying such a move would scare away investment into the sector.
BY BUSINESS REPORTER
In March, government announced plans to merge all diamond producers into one entity in which it would have 50% shareholding. The remainder would be shared by the producers determined by the level of investment.
In a monthly brief, AfDB said although the amalgamation of diamond firms had happened in other countries such as Angola (Endiama, the national diamond company), Botswana (Debswana National Diamond Corporation) and Namibia (Namdeb Diamond Corporation), the process had to be done in a manner that would attract investment into the industry.
“There is need for a transparent process in the transformation of shareholding in the consolidated company in order to maintain confidence and attract capital in the diamond sector,” AfDB said.
“This may entail provision of timelines which facilitate a smooth changeover in the mining concerns.”
The move to amalgamate comes after realisation that diamond revenue, particularly from Marange producers, was not getting into Treasury coffers.
This has given credence to claims that a few individuals in the government were benefiting from the diamonds at the expense of the economy.
Former Finance minister Tendai Biti complained during the tenure of the inclusive government that diamond revenue was not flowing to Treasury, forcing the ministry to continuously adjust the budget.
“There is no doubt that a small coterie of individuals is benefiting from Zimbabwe diamonds. Some of us (officials) who are benefiting are not afraid to flaunt our monies. We are buying all kinds of assets,” Biti told a diamond workshop in 2012.
“I am a government minister and earning $800 (a month). How do I buy some of the assets that we are buying? People are now buying private jets because of our diamonds.”